Content presented by NAIOP Maryland
Throughout NAIOP Maryland’s 40th anniversary year, InSites will be engaging with commercial real estate professionals who played integral roles in shaping the mission of the Chapter as it navigated economic conditions and pressing issues impacting its membership.
The inaugural discussion brings together Richard Manekin, who was President in 1986-1987 and is a partner at Baltimore-based Workshop Development, and Eric Schrank, who served as NAIOP-MD President in 1988 and is now retired and living in Charlottesville, Virginia. Manekin and Schrank were, respectively, the second and third Presidents of the Chapter, following Steve Hartman of MIE Properties, Inc.
The need to form an alliance
Eric: “Legislation being introduced in Annapolis was concerning to the commercial real estate community, much like it is today. I remember one particular bill which required unionized labor to address every property management issue faced by building owners, no matter how big or small.
That meant simple things, for example, replacing a burnt-out light bulb in an office building would require hiring a worker which belongs to a union. Imagine how much more expensive that would be to building owners.”
Richard: “We successfully killed that piece of legislation but it just fortified the importance of banding together to fight issues such as these. Ed St. John was a strong proponent of this effort, as were others. Eventually, Ira Cook, a local real estate attorney started devoting his time to this cause, and he was joined by Patrick Hughes of BTR Realty/MART. Together they successfully fought zoning, land issues, construction codes, and tax policies.”
Eric: “The company I was working with faced a major situation with a proposed piece of legislation as it pertained to the Chesapeake Bay Agreement, which sought to diminish land erosion and help improve conditions of the Chesapeake Bay. The law would have negatively impacted or limited development activities that were too close to the water. We gained approval for the housing project one day before this legislation took effect but needed to install the largest rip wrap system in the State of Maryland to move forward.”
Forming NAIOP and electing the first President
Richard: “The commercial real estate community was loosely organized with an association that was called NAIP and stood for National Association of Industrial Properties. We wanted to expand the depth and breadth of the group and this meant involving new development companies which specialized in commercial office developments. So, the ‘O’ was added to the acronym and it now stood for National Association of Office and Industrial Parks. That worked and the organization quickly attracted new members and grew.”
Eric: “Steve Hartman, then Principal for MIE Properties was elected as the first President when NAIOP Maryland was formed in 1985. Unfortunately, personal health issues prevented him from serving for more than a one-year term and Richard stepped in to run the group. As his tenure was ending, the board of directors met to choose a successor and I remember having to briefly leave the meeting to visit the bathroom. When I returned the gathering announced ‘Congratulations – while you were away, we elected you as the next President.’ At that point I laughed and accepted the appointment.”
Strength in numbers from Day 1
Richard: “Our group had a running start when we formed and began with 284 members, of which 150 were working with commercial real estate development groups and 134 with affiliated companies serving our industry. In addition to our important lobbying efforts, NAIOP filled essential networking and educational roles. Members felt part of a cohesive group that worked together and helped each other, even if they represented competing development or brokerage firms. Competitors by day become close friends at night or over the weekend. It was a situation that made our industry extremely unique.”
Eric: “Our annual market update was a highly-anticipated event that drew large audiences, with involvement from many development and brokerage firms. The awards ceremony was also extremely popular and several were held throughout the year to honor different real estate asset classes. In preparation of the awards programs, we loaded our members into buses and drove them throughout the State to tour properties. Because our Chapter worked in several different counties including Baltimore City, we felt it was necessary to divide things up based on different geographic regions.”
Early leaders make a difference
Richard: “Ed St. John, together with Bob Becker of MIE Properties, played prominent roles with the Chapter in the early days, as did Leroy Merritt and Scott Dorsey of Merritt Properties; Bob Aumiller of MacKenzie Commercial Real Estate Services; and Ed Ely of The Rouse Co.”
Eric: “I knew NAIOP Maryland was starting to gain traction when I found myself sitting next to Barbara Mikulski at an event, and I started talking to her about the commercial real estate industry and its impact on the Maryland economy. She was running for Senate at the time and was asking about different real estate-related legislation and what advice I had. She went on to win the election and I think she took many of my ideas to heart.”
Banding together during times of crisis
Richard: “The savings and loan crisis hit hard during the late 1980s and the commercial real estate industry was in constant fear of losing their buildings to the banks. I do not think anything of significance was constructed between 1990 and 1998. It was everything we could do just to survive but we had each other to lean on to compare notes and develop work-out strategies. That feeling of being part of a brotherhood was very special and exists to this day.”
Eric: “I remember that time well. Many owners were over-leveraging their buildings and, instead of taking loans representing 60 to 70 percent of the asset valuation, asking for loans that were 10-20 percent higher than the actual valuation. That caused problems when leasing slowed and the loan payments became exorbitant. Financial institutions started taking ownership of these failed buildings and, in order to complete leasing, started lowering rental rates by up to 50 percent. Tenants and prospective tenants asked us to do the same, but we refused. Many of our peers point to that period of time as the greatest threat to their existence. NAIOP Maryland also managed to stay afloat and provided incredible support and resources during that very dark time.”
